What is Escrow?
Escrow is when a neutral party holds a payment until both buyer and seller have done their part.
Updated
Meaning
English
Escrow is when a neutral party holds a payment until both buyer and seller have done their part.
Roman Urdu
Escrow me ek beech ka fareeq paise tab tak rakhta hai jab tak khareedar aur bechne wala dono apna kaam poora na kar dein.
Also called escrow payment, amanat payment.
Example
A buyer orders a used laptop from a seller in another city through a platform with escrow. The buyer pays the platform, the seller ships, and the platform releases the money to the seller once the buyer confirms the laptop works.
How it works
Escrow solves the trust problem between strangers. The buyer does not want to pay before seeing the goods; the seller does not want to ship before being paid. With escrow, both are protected: the money exists, but neither side can take it until the deal is done. Disputes go to the escrow holder, who decides based on evidence.
It is used in property deals, freelance platforms, high-value used goods and some online marketplaces. Escrow services charge a fee, and their rules on how long the buyer has to raise a problem matter as much as the fee.
In Nafaa
Nafaa does not offer an escrow service.
Related terms
- Online Marketplace
An online marketplace is a website or app where many sellers list products and customers buy from them, with the platform handling the storefront and often payment and delivery.
- Chargeback
A chargeback is when a card payment is reversed by the customer's bank after the customer disputes it, and the money is taken back from the merchant.
- Payment Gateway
A payment gateway is a service that lets a website or app accept card, wallet or bank payments online and passes the money to the seller's account.